NEW DELHI, Oct 8 (Reuters) - India looks set to begin
dismantling a complex web of regulatory requirements that
throttle its infrastructure growth, with plans to set up a
special body this week to speed up projects in a sector seen as
vital to reviving economic momentum.

The move is the latest in a slew of big-ticket reforms by
Prime Minister Manmohan Singh's government, from raising diesel
prices to opening supermarkets to foreign competition, to spur
growth which is at its slowest pace in nearly three years.

Finance Minister P. Chidambaram said the cabinet was
expected to establish a National Investment Board (NIB) this
week, to speed up clearances for projects that are now bounced
from one ministry to another in a process that can stretch for
years and frustrates investors.

However, this latest reform initiative may not be the
panacea for a sector hobbled by layers of bureaucracy because,
despite the single-window in New Delhi, approvals could still be
held up by mandarins in the states where projects are proposed.

In what is seen as a hangover from the days of India's
"Licence Raj" economy of quotas and permits - which Singh helped
abolish as finance minister more than two decades ago - a
typical infrastructure project requires clearances from 19
federal ministries ranging from environment to defence.

"The idea is nothing should be held up beyond a reasonable
timeframe," a senior Finance Ministry official said, when asked
about the board. "You cannot just sit over it. You cannot just
sit over a file."

The government's investment reforms of recent weeks are
expected to help turn around bearish investor sentiment but they
may not perk up growth without a rapid upgrade to the nation's
pot-holed roads and stretched power networks.

India's investment rate has fallen to 32 percent from 38
percent in 2007/08. Analysts say investment needs to pick up
before the economy returns to the 9 percent growth it was
clocking before the 2008 global financial crisis.

Poor infrastructure is a blight on the economy. Frequent
power cuts, poor roads and an antiquated railway network sap the
competitiveness of Indian businesses and leave hundreds of
millions of people without basic utilities.

In July, a collapse in three of India's five transmission
grids cut power to 670 million people.

SIX-YEAR WAIT

U. Kumar, an adviser to Essel Mining in the Aditya Birla
group, said the group's Hindalco Industries was
awarded permission to mine a coal field six years ago, but was
still awaiting environmental clearance to start.

Even though the number of desks a mining application has to
pass through in the forest department has been reduced by 10 to
26, there are about 28 acts and rules under which clearances are
required, he said.

To start an infrastructure project, it requires on average
56 permissions from different federal, state and local agencies.
The whole process takes about up to 24 months.

The proposed investment board, headed by Singh, will focus
on fast-tracking the execution of approved projects by getting
all regulatory clearances.

Singh has already set up panels and instituted an investment
tracking system to speed up stalled projects. However, those
measures have done little to cut the bureaucratic tape.
Chidambaram recently said the experiment had failed.

Investors have welcomed plans to create the board, but
analysts warn that it is unlikely to be a perfect solution.

While it will cut the amount of time needed for federal
approvals, it has no power over individual states in which
projects are located, leaving construction at the mercy of
state-level permissions.

"Different ministries, at times, work in isolation, which
further delays projects. A board, chaired by the prime minister,
will certainly help in expediting projects," said Vishwas
Udgirkar, a senior director at Deloitte.

"But it will not solve all the problems facing the sector."
($1=51.86 rupees)
(Additional reporting by Archana Narayanan, Arup Roychoudhury,
Malini Menon and Rosemary Arackaparambil; Editing by Robert
Birsel)